Draft Technical Assessment Report:

            Midterm Evaluation of Light-Duty
            Vehicle Greenhouse Gas Emission
            Standards and Corporate Average Fuel
            Economy Standards for Model Years

            Executive Summary
United States
Environmental Protection
California Environmental Protection Agency
©•Air Resources Board

 Draft Technical Assessment Report:

  Midterm Evaluation of Light-Duty
  Vehicle Greenhouse Gas Emission
Standards and Corporate Average Fuel
 Economy Standards for Model Years

          Executive Summary
           Office of Transportation and Air Quality
           U.S. Environmental Protection Agency

         National Highway Traffic Safety Administration
            U.S. Department of Transportation


             California Air Resources Board
                                  July 2016

                                                                    Executive Summary
Executive Summary

   The Environmental Protection Agency (EPA) and the Department of Transportation's
National Highway Traffic Safety Administration (NHTSA) have established a coordinated
program for Federal standards for greenhouse gas (GHG) emissions and corporate average fuel
economy (CAFE) for light-duty vehicles.1  This program was developed in cooperation and
alignment with the California Air Resources Board (CARB) to ensure a single National Program.
The National Program established standards that increase in stringency year-over-year from
model year (MY) 2012 through MY2025 for EPA and through MY2021 for NHTSA.  California
adopted the first in the nation GHG standards for light-duty vehicles in 2004 for MY2009-2016,
and in 2012 for MY2017-2025, followed by amendments that allow compliance with the Federal
GHG standards as compliance with the California GHG standards, in furtherance of a single
National Program. Under the National Program, consumers continue to have a full range of
vehicle choices that meet their needs, and, through coordination with the California standards,
automakers can build a single fleet of vehicles across the U.S. that satisfies all GHG/CAFE
requirements. In the agencies' 2012 final rules establishing the MY2017-2025 standards for
EPA and 2017-2021 final  and 2022-2025 augural standards for NHTSA, the National Program
standards were projected by MY2025 to double fuel economy and cut GHG emissions in half,
save 6 billion metric tons of carbon dioxide (CCh) pollution and 12 billion barrels of oil over the
lifetime of MY2012-2025 vehicles, and deliver significant savings for consumers at the gas

   The rulemaking establishing the National Program for MY 2017-2025 light-duty vehicles
included a regulatory requirement for EPA to conduct a Midterm Evaluation (MTE) of the GHG
standards established for MYs 2022-2025.' The 2012 final rule preamble also states that "[t]he
mid-term evaluation reflects the rules' long time frame, and, for NHTSA, the agency's statutory
obligation to conduct a de novo rulemaking in order to establish final standards for MYs 2022-
2025." NHTSA will consider information gathered as part of the MTE record, including
information submitted through public comments, in the comprehensive de novo rulemaking it
must undertake to set CAFE standards for MYs 2022-2025." Through the MTE, EPA must
determine no later than April 1, 2018 whether the MY2022-2025 GHG standards, established in
2012, are still appropriate  under section 202 (a) of the Clean Air Act, in light of the record then
before the Administrator, given the latest available data and information.111 EPA's decision could
go one of three ways: the standards remain appropriate, the standards should be less stringent,  or
the standards should be more stringent. EPA and NHTSA also are closely coordinating with
CARB in conducting the MTE to better ensure  the continuation of the National Program.  The
MTE will be a collaborative, data-driven, and transparent process and must entail a holistic
assessment of all the factors considered in the initial standards  setting.1V

   This Draft Technical Assessment Report (TAR), issued jointly by EPA, NHTSA, and CARB
for public comment, is the first formal step in the MTE process/ In this Draft TAR, the agencies
examine a wide range of technical issues relevant to GHG emissions and augural CAFE
standards for MY2022-2025, and share with the public the initial technical analyses of those
issues.  This is a technical report, not a policy or decision document. The information in this
1 The agencies finalized the first set of National Program standards covering model years (MYs) 2012-2016 in May
  20101 and the second set of standards, covering MYs 2017-2025, in October 2012.

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report, and in the comments we receive on it, will inform the agencies' subsequent determination
and rulemaking actions. The agencies will fully consider public comments on this Draft TAR as
they continue to update and refine the analyses for further steps in the MTE process.

   In this Draft TAR, EPA provides its initial technical assessment of the technologies available
to meet the MY2022-2025 GHG standards and one reasonable compliance pathway, and
NHTSA provides its initial assessment of technologies available to meet the augural MY2022-
2025 CAFE standards and a different reasonable compliance pathway. Given that there are
multiple possible ways that new technologies can be added to the fleet, examining two
compliance pathways provides valuable additional information about how compliance may
occur.  NHTSA and EPA also performed multiple sensitivity analyses which show additional
possible compliance pathways.  The agencies' independent analyses complement one another
and reach  similar conclusions:

      A wider range of technologies exist for manufacturers to use to meet the MY2022-2025
      standards, and at costs that are similar or lower, than those projected in the  2012 rule;
      Advanced gasoline vehicle technologies will continue to be the predominant technologies,
      with modest levels of strong hybridization and very low levels of full electrification (plug-
      in vehicles) needed to meet the standards;
   -   The car/truck mix reflects updated  consumer trends that are informed by a range of factors
      including economic growth, gasoline prices, and other macro-economic trends.  However,
      as the standards were designed to yield improvements across the light duty  vehicle fleet,
      irrespective of consumer choice, updated trends are fully accommodated by the footprint-
      based standards.
   Additionally, while the Draft TAR analysis focuses on the MY2022-2025 standards, the
agencies note that the auto industry, on average, is over-complying with the first several years of
the National Program.  This has occurred  concurrently with a period during which the
automotive industry successfully rebounded after a period of economic distress. The industry
has now seen six consecutive years of increases and a new all-time sales record in 2015,
reflecting positive consumer response to vehicles complying with the standards.

   A summary of each chapter of the Draft TAR follows.

   Chapter 1:  Introduction. This chapter provides a broad discussion of the National
Program, explains further the MTE process and timeline, and provides additional background on
NHTSA's CAFE program, EPA's GHG program, and California's GHG program. This chapter
also includes an update on what the latest science tells us about climate change impacts, and the
U.S.'s and California's commitments on actions to address climate change. Chapter 1  also
provides a discussion of petroleum consumption and energy security.

   Chapter 2:  Overview of Agencies' Approach to Draft TAR Analysis. The  agencies are
committed to conducting the MTE through a collaborative, data-driven, and transparent process.
In gathering data and information for this Draft TAR,  the agencies drew from a wide range of
sources to evaluate how the automotive industry has responded into the early years of the
National Program, how technology has developed, and how other factors affecting the light-duty
vehicle fleet have changed since the final  rule in 2012. The agencies found that there is a wealth
of information since the 2012 final rule upon which to inform this Draft TAR,  and this

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information is detailed throughout the document. Chapter 2 describes these sources, including
extensive state-of-the-art research projects by experts at the EPA National Vehicle and Fuel
Emissions Laboratory, as well as consultants to the agencies, data and input from stakeholders,
and information from technical conferences, published literature, and studies published by
various organizations. A significant study informing the agencies' analyses is the National
Academy of Sciences 2015 report" on fuel economy technologies, which the agencies highlight
in Chapter 2, and discuss throughout this document.

   The analyses presented in this Draft TAR reflect the new data and information gathered by the
agencies thus far, and the agencies will continue to gather and evaluate more up-to-date
information, including public comments on this Draft TAR, to inform our future analyses. The
agencies have conducted extensive outreach with a wide range of stakeholders - including auto
manufacturers, automotive suppliers, non-governmental organizations (NGOs), consumer
groups, labor unions, automobile dealers, state and local governments, and others.

   Chapter 3: Recent Trends in the Light-Duty Vehicle Fleet since the 2012 Final Rule.
This chapter summarizes trends in the light-duty vehicle market in the four years since the 2012
final rule, including changes in fuel economy/GHG emissions, vehicle sales, gasoline prices,
car/truck mix, technology penetrations, and vehicle power, weight and footprint. Since the 2012
final rule, vehicle sales have been strong, hitting an all-time high of 17.5 million vehicles in
2015, gas prices have dropped significantly, and truck share has grown. At the same time, fuel
economy technologies are entering the market at rapid  rates. The agencies provide the latest
available projections for vehicle sales, gasoline prices,  and fleet mix out to 2025, and compare
those to projections made in the 2012 final rule.  This chapter also highlights compliance to date
with the GHG and CAFE standards, where, for the first three years of the program (MY2012-
2014), auto manufacturers have over-complied with the program.

   Chapter 4: Baseline and Reference Vehicle Fleets. This chapter describes the agencies'
methodologies for developing a baseline fleet of vehicles and future fleet projections out to
MY2025.  The GHG analysis uses a baseline fleet based on the MY2014 fleet, the latest year
available for which there are final GHG  compliance data. The CAFE analysis uses a MY2015
baseline fleet based on MY2015 data and sales projections provided by manufacturers in the
latter half of MY2015, when production  was well underway. These data sets complement one
another and each yield important perspective, with the MY2014 data  having the benefit of
validation through compliance data, and the MY2015 data providing  more recent perspective.
The GHG and CAFE analysis fleets utilized similar, but separate, purchased projections  from
IHS-Polk for the future vehicle fleet mix out to 2025, thereby representing some of the
uncertainty inherent in all reference case projections. Both analyses used data from the Energy
Information Administration's Annual Energy Outlook 2015 (AEO 2015) as the basis for total
vehicle sales projections to 2025,  as well as for the car and truck volume mix.  Although the
agencies have relied on different data sources in development of the baseline fleets, we believe
this combination of approaches strengthens our results  by showing robust results across a range
of reference case projections.

   Chapter 5: Technology Costs, Effectiveness, and Lead-Time Assessment.  This chapter is
an in-depth assessment of the state of vehicle technologies to improve fuel economy and reduce
GHG emissions, as well as the agencies' assessment of expected future technology developments
through MY2025.  The technologies evaluated include all those considered for the 2012  final

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rule, as well as new technologies that have emerged since then. Every technology has been
reconsidered with respect to its cost, effectiveness, application, and lead-time considerations,
with emphasis on assessing the latest introductions of technologies to determine if and how they
have changed since the agencies' assessment in the 2012 final rule. These efforts reflect the
significant rate of progress made in automotive technologies over the past four years since the
MY2017-2025 standards were established.  Technologies considered in this Draft TAR include
more efficient engines and transmissions, aerodynamics, light-weighting, improved accessories,
low rolling resistance tires, improved air conditioning systems, and others. Beyond the
technologies the agencies considered in the 2012 final rule, manufacturers are now employing
several technologies, such as higher compression ratio, naturally aspirated gasoline engines, and
greater penetration of continuously variable transmissions (CVTs); other new technologies are
under active development and are expected to be in the fleet well before MY2025, such  as 48-
volt mild hybrid systems.

   In Chapter 5, the agencies also provide details on the specific technology assumptions used
respectively by EPA for the GHG assessment and by NHTSA for the CAFE assessment in this
Draft TAR, including the specific assumptions that EPA and NHTSA each made for each
technology's cost and effectiveness, and lead-time considerations. The agencies' estimates of
technology effectiveness were informed by vehicle simulation modeling approaches; NHTSA
utilized the Autonomie model developed by Argonne National Laboratories for the Department
of Energy (DOE), and EPA used its Advanced Light-duty Powertrain and Hybrid Analysis
(ALPHA) model.  The agencies look forward to public comment in this and other areas to help
advance collective forecasting of technology effectiveness in  the out years of the program.

   It is clear that the automotive industry is innovating and bringing new technology to market at
a rapid pace and neither of the respective agency analyses reflects all of the latest and emerging
technologies that may be available in the 2022-2025 time frame. For example, the agencies were
not able for this Draft TAR to evaluate the potential for technologies such as electric turbo-
charging, variable compression ratio, skip-fire cylinder deactivation, and P2-configuration mild-
hybridization. These technologies may provide further cost-effective reductions in GHG
emissions and fuel consumption. The agencies will continue  to update their analyses throughout
the MTE process as new information becomes available.

   Chapter 6: Assessment of Consumer Acceptance of Technologies that Reduce Fuel
Consumption and GHG Emissions. This chapter reviews issues surrounding consumer
acceptance of the vehicle technologies expected to be used to meet the MY2022-2025 standards.
Since the program has been in effect since MY2012, the  agencies focus on the evidence to date
related to consumer acceptance of vehicles subject to the National Program standards. This
evidence includes an analysis of how professional auto reviewers assess fuel-saving
technologies. For each technology, positive evaluations exceed negative evaluations, suggesting
that it is possible to implement these technologies without significant hidden costs.  To date,
consumer response to vehicles subject to the standards is positive. Chapter 6 also discusses
potential impacts of the standards on vehicle sales and affordability, which are closely
interconnected with the effects of macroeconomic and other market forces. Based on the
agencies' draft assessments, the reduced operating costs from fuel savings over time are expected
to far exceed the increase in up-front vehicle costs, which should mitigate any potential adverse
effects on vehicle sales and affordability.

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   Chapter 7: Employment Impacts. This chapter discusses the effects of employment in the
automotive sector to date, and the projected effects of the MY 2022-2025 standards on
employment.  Employment in the automotive industry dropped sharply during the Great
Recession, but has increased steadily since 2009.  The primary employment effects of these
standards are  expected to be found in several key sectors: auto manufacturers, auto parts
manufacturing, auto dealers,  fuel production and supply, and consumers. The MY2025
standards are  likely to have some effect on employment, due to both the effects of the standards
on vehicle sales, and the need to produce new technologies to meet the standards.  Nevertheless,
the net effect  of the standards on employment is likely to be small compared to macroeconomic
and other factors affecting employment.

   Chapter 8: Assessment of Vehicle Safety Effects. This chapter assesses the  estimated
overall crash  safety impacts of the MY 2022-2025 standards.  In this chapter, the agencies first
review the relationships between mass, size, and fatality risk based on the statistical analysis of
historical crash data, which includes the new analysis performed by using the most recent crash
data.  The updated NHTSA analysis develops five parameters for use in both the NHTSA and
EPA assessments to calculate the estimated safety impacts of the modeled mass reductions over
the lifetimes of new vehicles in response to MY 2022-2025 GHG standards and augural CAFE
standards. Second, to examine the impact of future lightweight vehicle designs on safety, the
agencies also  reviewed a fleet crash simulation study that examined frontal crashes using
existing and future lightweight passenger car and cross-over utility vehicle designs. The study
found a relationship between vehicle mass reduction and safety that is directionally consistent
with the overall risk for passenger cars from the NHTSA 2016 statistical analysis  of historical
crash data.  Next, the agencies investigate the amount of mass reduction that is affordable and
feasible while maintaining overall fleet safety and as well as functionality such as durability,
drivability, noise, vibration and handling (NVH), and acceleration performance. Based on those
approaches, the agencies further discuss why the real world safety effects might be less than or
greater than calculated safety impacts, and what new challenges these lighter vehicles might
bring to vehicle safety and potential countermeasures available to manage those challenges

   Chapter 9: Assessment of Alternative Fuel Infrastructure. This chapter assesses the
status of infrastructure for alternative fueled vehicles, with emphasis on two technologies the
agencies believe will be important for achieving longer-term climate and energy goals - plug-in
electric vehicles (PEVs) and  fuel cell electric vehicles (FCEVs). The agencies also discuss
infrastructure for ethanol (E85) flex-fueled vehicles and natural gas vehicles.  The agencies'
assessment is that, as we concluded in the 2012 rule, high penetration levels of alternative fueled
vehicles will not be needed to meet the MY2025 standards, with the exception of a very small
percentage of PEVs, and that infrastructure is progressing sufficiently to support vehicles from
those manufacturers choosing to produce alternative fueled vehicles to meet the MY2022-2025
standards. The majority of PEV charging occurs at home, and national PEV infrastructure in
public and work locations is progressing appropriately. Hydrogen infrastructure developments
are addressing many of the initial challenges of simultaneously launching new vehicle and
fueling infrastructure markets, and current efforts in California and the northeast states will
facilitate further vehicle and infrastructure rollout at the national level.

   Chapter 10:  Economic and Other Key Inputs Used in  the Agencies' Analyses. This
chapter describes many of the economic and other inputs used in the agencies' analyses. This

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chapter discusses the methodologies used to assess inputs such as the real-world fuel
economy/GHG emissions gap, vehicle miles traveled (VMT), vehicle survival rates, the VMT
rebound effect, energy security, the social cost of carbon and other GHGs, health benefits,
consumer cost of vehicle ownership, and others.

   Chapter 11: Credits, Incentives and Flexibilities.  The National Program was designed
with a wide range of optional compliance flexibilities to allow manufacturers to maintain
consumer choice,  spur technology development, and reduce compliance costs, while achieving
significant GHG and oil reductions. Chapter 11 provides an informational overview of all of
these compliance flexibilities, with particular emphasis on those flexibility options likely to be
most important in the MY2022-2025 timeframe.

   Chapter 12: Analysis of the MY2022-2025 GHG Standards;  and Chapter 13: Analysis of
Augural CAFE Standards.  Chapters 12 and 13 provide results, respectively, of EPA's initial
technical assessment of the technologies available to meet the MY2022-2025 GHG standards
(i.e., the footprint-based standard curves) and their costs, and NHTSA's initial technical
assessment of technologies capable of meeting CAFE standards corresponding to the augural
standards for MY2022-2025, and these technologies' costs. CARB has not conducted an
independent analysis, but has participated in both EPA's and NHTSA's analyses.  Although all
three agencies have been working collaboratively in an array of areas throughout the
development of this  Draft TAR, the EPA GHG and NHTSA CAFE assessments were done
largely independently. These independent analyses were done in part to recognize differences in
the agencies'  statutory authorities and to reflect independent choices regarding some of the
modeling inputs used at this initial stage of our evaluation. The agencies believe that
independent and parallel analyses can provide complementary results.  The agencies further
believe that, for this  Draft TAR which is the first step of the Midterm Evaluation process, it is
both reasonable and  advantageous to make use of different data sources and modeling tools, and
to show multiple pathways for potential compliance with the MY 2022-2025 GHG standards and
augural CAFE standards.

   As noted above, although CARB did not perform its own modeling assessment of the costs
and technologies to meet the 2022-2025 GHG and  CAFE requirements, it was integrally
involved in analyzing the underlying technology cost and effectiveness inputs to the EPA and
NHTSA modeling.  CARB believes that the analyses presented in this Draft TAR appropriately
present a range of technologies that could be used to meet the requirements. However, as
discussed above, there are, and will continue to be, emerging technologies that may well be
available in the 2022-2025 timeframe and could perform appreciably better or be lower cost than
the technologies modeled in this Draft TAR.  Such technologies are exemplified by recent
advancements already seen in the marketplace yet not anticipated by the agencies' rule four years
ago (e.g., expanded use of higher compression ratio, naturally aspirated gasoline engines).
Vehicle manufacturers have historically outpaced agency expectations and CARB believes it is
likely that industry will continue to do so.

   In this Draft TAR, NHTSA does not present alternatives to the augural standards because, as
the first stage of the  Midterm Evaluation process, the TAR is principally an exploration of
technical issues — including assumptions about the effectiveness and cost of specific
technologies,  as well as other inputs, methodologies and approaches for accounting for these
issues. The agencies seek comment from stakeholders to further inform the analyses, in advance

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of the NHTSA rulemaking and the EPA Proposed Determination.  For the purposes of clearly
reflecting the impacts of updated technology assumptions relative to a familiar point of
comparison, both agencies have run their respective models using the stringency levels included
in NHTSA's augural standards, and EPA's existing GHG standards through MY2025. However,
the technology assumptions and other analyses presented in this Draft TAR, which will be
informed by public comment, will support the development of a full range of stringency
alternatives in the subsequent CAFE Notice of Proposed Rulemaking.

  In this Draft TAR, the EPA GHG and NHTSA CAFE assessments both show that the
MY2022-2025 standards can be achieved  largely through the use of advanced gasoline vehicle
technologies with modest penetrations of lower cost electrification (like 48 volt mild hybrids
which include stop/start) and low penetrations of higher cost electrification (like strong hybrids,
plug-in hybrid electric vehicles, and all electric vehicles). Given the rapid pace of automotive
industry innovation, the agencies may consider effectiveness and cost of additional technologies
as new information, including comments on this Draft TAR, becomes available for further steps
of the Midterm Evaluation.

  Based on various assumptions including the Annual Energy Outlook 2015 (AEO 2015)
reference case projections of the car/truck mix out to 2025, the footprint-based GHG standards
curves for MY2022-2025 are projected to achieve an industry-wide fleet average CCh target of
175 grams/mile (g/mi) in MY2025, and the augural CAFE standards are projected to result in
average CAFE requirements increasing from 38.3 mpg in MY2021 to 46.3 mpg in MY2025.
The projected fleet average CCh target represents a GHG emissions level equivalent to 50.8 mpg
(if all reductions were achieved exclusively through fuel economy improvements).2

  Table ES-1 below compares two additional AEO 2015 scenarios in addition to the AEO 2015
reference case:  a low fuel  price case and a high fuel price case. As shown, these fuel price cases
translate into different projections for the car/truck fleet mix (e.g., with a higher truck share
shown in the low fuel price case, and a lower truck share shown in the high fuel price case),
which in turn leads to varying projections for the estimated fleet wide CAFE requirements and
GHG CO2 targets and MPG-e levels projected for MY2025, from 169 g/mi (52.6 mpg-e) under
the high fuel price case to 178 g/mi (49.9 mpg-e) under the low fuel price case.  These estimated
GHG target  levels and CAFE requirements reflect changes in the latest projections about the
MY2025 fleet mix compared to the projections in 2012 when the agencies first established the
standards. Under the footprint-based standards, the program is designed to ensure significant
GHG reductions/fuel economy improvements across the fleet, and each automaker's standard
automatically adjusts based on the mix (size and volume) of vehicles it produces each  model
year.  In the  agencies' current analyses for this Draft TAR, we are  applying the same footprint-
based standards established in the 2012 final rule to the updated fleet projections for MY2025.  It
is important  to keep in mind that the updated MY2025 fleet wide projections reflected in this
Draft TAR are still just projections (as were the fleet projections in the 2012 rule) — based on the
latest available information, which may continue to change with future projections — and that the
actual GHG  emissions/fuel economy level achieved in MY2025 won't be determined until the
2 The projected MY 2025 target of 175 g/mi represents an approximate 50% decrease in GHG emissions relative to
  the fuel economy standards that were in place in 2010. It is clear from current GHG manufacturer performance
  data that many automakers are earning air conditioner refrigerant GHG credits that reduce GHG emissions, but do
  not increase fuel economy. Accordingly, the projected MY 2025 target of 175 g/mi represents slightly less than a
  doubling of fuel economy relative to the standards that were in place in 2010.


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manufacturers have completed their MY2025 production.  The agencies will continue to assess
the latest available projections as we continue the Midterm Evaluation process.
Table ES-1 Projections for MY2025:  Car/Truck Mix, CO2 Target Levels, and MPG-equivalent1

Car/truck mix
CAFE (mpg)2
CO2 (g/mi)

2012 Final Rule
AEO 2015 Fuel Price Case
AEO Reference
AEO High
1 The CAFE, COa and MPG-e values shown here are 2-cycle compliance values. Projected real-world values are
detailed in Chapter 10.1; for example, for the AEO reference fuel price case, real-world EPA CCh emissions
performance would be 220 g/mi and real-world fuel economy would be 36 mpg.
2 Average of estimated CAFE requirements.
3 Mile per gallon equivalent (MPG-e) is the corresponding fleet average fuel economy value if the entire fleet were
to meet the CO2 standard compliance level through tailpipe CO2 improvements that also improve fuel economy.
This is provided for illustrative purposes only, as we do not expect the GHG standards to be met only with fuel
efficiency technology.

   The agencies' updated assessments provide projections for the MY2022-2025 standards for
several key metrics, including modeled "low-cost pathway" technology penetrations, per-vehicle
average costs (cars, trucks, and fleet, by manufacturer and total industry-wide), industry-wide
average costs, GHG and oil reductions, consumer payback, consumer fuel savings, and benefits

   Based on the extensive updated assessments provided in this Draft TAR, the projections for
the average per-vehicle costs of meeting the MY2025 standards (incremental to the costs already
incurred to meet the MY2021 standard) are, for EPA's analysis of the GHG program, $894 -
$1,017, and, for NHTSA's analysis of the CAFE program, $1,245 in the primary analysis using
Retail Price Equivalent (RPE), and $1,128 in a sensitivity case analysis using Indirect Cost
Multipliers (ICM).  In the 2012 final rule, the estimated costs for meeting the MY2022-2025
GHG standards (incremental to the costs for meeting the MY2021 standard in MY2021) was
! This cost estimate from the 2012 final rule was based on the use of Indirect Cost Multipliers (ICMs) in 2010$.

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    Table ES- 2 Per-Vehicle Average Costs to Meet MY2025 Standards: Draft TAR Analysis
       Costs Shown are Incremental to the Costs to Meet the MY2021 Standards

GHG1 in MY2025
Primary Analysis
RPE Sensitivity
CAFE in MY 2028
Primary Analysis2
ICM Sensitivity
1 The values reported for the GHG analysis to account for indirect costs reflect the use of Indirect Cost Multipliers
for the primary analysis, and Retail Price Equivalent for the sensitivity case.
2 The values reported for CAFE primary analysis reflect the use of RPE and include civil penalties estimated to be
incurred by some OEMs as provided by EPCA/EISA. Estimated technology costs (without civil penalties) average
$ 1,111, $ 1,246, and $ 1,174, respectively for MY2028 passenger cars, light trucks, and the overall light-duty fleet.
3 Note that Chapter 12 (GHG) and Chapter 13 (CAFE) include a wide range of additional sensitivity cases.

   In  Table ES-2, NHTSA's estimates are provided for MY2028 because NHTSA's analysis,
which is conducted on a year-by-year basis, indicates that manufacturers could make use of
EPCA/EISA's provisions allowing credits to be earned and carried forward to be applied toward
ensuing model years.  Therefore, NHTSA's analysis indicates that a "stabilized" response to the
augural standards might not be achieved until approximately 2028 (see Chapter 13 for additional
detail). EPA estimates are provided for MY2025 because EPA's analysis projects that each
manufacturer would comply in MY2025 with that year's standards (see Chapter 12  for additional

   Table ES-3 shows fleet-wide penetration rates for a subset of the technologies the agencies'
project could be utilized to comply with the MY2025 standards. While all three agencies have
been working collaboratively on an array of issues throughout this initial phase of the Midterm
Evaluation, much of the EPA GHG and NHTSA CAFE assessments were done largely
independently, as reflected in the different technology pathways shown in Table ES-3 (see
Chapter 2.3  for additional detail). The agencies' analyses each project that the MY2022-2025
standards can be met largely through improvements in gasoline vehicle technologies, such as
improvements in engines, transmissions, light-weighting, aerodynamics, and accessories. The
analyses further indicate that only modest amounts of hybridization, and very little full
electrification (plug-in hybrid electric vehicles (PHEV) or electric vehicles (EV)) technology
will be needed to meet the standards. This initial assessment of potential technology paths is
similar to the agencies' projections made in the 2012 final rule, and is consistent with the
findings of the National Academy of Sciences report from June 2015 (discussed in Chapter 2).

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                Table ES- 3 Selected Technology Penetrations to Meet MY2025 Standards1

Turbocharged and downsized
gasoline engines
Higher compression ratio, naturally
aspirated gasoline engines
8 speed and other advanced
Mass reduction
Mild Hybrid
Full Hybrid
Plug-in hybrid electric vehicle3
Electric vehicle3
1 Percentages shown are absolute rather than incremental. These values reflect both EPA and NHTSA's primary
analyses; both agencies present additional sensitivity analyses in Chapter 12 (GHG) and Chapter 13 (CAFE). For
EPA this includes a pathway where higher compression ratio naturally aspirated gasoline engines are held at a 10%
penetration, and the major changes are turbocharged and downsized gasoline engines increase to 47% and mild
hybrids increase to 38% (See Chapter 12.1.2)
2 Including continuously variable transmissions (CVT)
3 In EPA's modeling, the California Zero Emission Vehicles (ZEV) program is considered in the reference case
fleet; therefore, 3.5% of the fleet is projected to be full EV or PHEV in the 2022-2025 timeframe due to the ZEV
program and the adoption of that program by nine additional states.

   Although some of the differences in costs are expected as EPA and NHTSA conducted two
independent analyses, the consideration of CARS's program also led to one important
difference. As noted in the footnote for Table ES-3, EPA's analysis included consideration for
compliance with other related state regulations including CARB's ZEV regulation that has also
been adopted by nine other states under Section 177 of the Federal Clean Air Act. CARB's ZEV
program requires a portion of new light-duty vehicle sales to be ZEVs and collectively, CA and
these states represent nearly 30 percent of nationwide  sales of light-duty vehicles. CARB
worked with EPA to include ZEVs reflecting compliance with California's ZEV program within
the reference fleet used by EPA.  NHTSA's analysis did not.  This  accounts for at least part of
the cost differences in the two agencies' analyses as well as for  some of the difference in
technology penetration rates for full hybrids.

   EPA's analysis indicates that, compared to the MY2021  standards, the MY2025 standards
will result in a net lifetime consumer savings  of $1,460 - $1,620 and a payback of about 5  to 5 1A
years.4  NHTSA's primary analysis indicates that net lifetime consumer savings could average
$680 per vehicle, such that increased vehicle purchase costs are paid back within about 6 /^
years, and $800 with payback within about 6 years in a sensitivity case analysis using ICMs.
4 Based on the AEO 2015 reference case gasoline price projections, 3 percent discount rate, and ICMs.

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     Table ES- 4 Payback Period and Lifetime Net Consumer Savings for an Average Vehicle Compared to
                                        the MY2021 Standards

Payback period
Net Lifetime
Consumer Savings
($, discounted at 3%)
MY2025 Vehicle
Primary Analysis
RPE Sensitivity Case
MY2028 Vehicle
Primary Analysis
ICM Sensitivity Case
* Note that Chapter 12 (GHG) and Chapter 13 (CAFE) include a wide range of additional sensitivity cases.
   Over the lifetimes of MY2021-2025 vehicles, EPA estimates that under the GHG standards,
GHG emissions would be reduced by about 540 million metric tons (MMT) and oil consumption
would be reduced by 1.2 billion barrels. Over the lifetimes of MY2016-2028 vehicles, NHTSA
estimates that under the augural MY2022-2025 CAFE standards,  GHG emissions would be
reduced by about 748 MMT and oil consumption would be reduced by about  1.6 billion barrels.
NHTSA's estimates span a wider range of model years for two reasons, as discussed in Chapter
13: first, the NHTSA analysis projects that manufacturers may take some "early action" prior to
MY2022; second, as discussed above, the response to the augural standards might not be
"stabilized" until after MY2025.  Differences in these values also result from  differences in the
agencies' estimates of annual mileage accumulation by light-duty vehicles.5
         Table ES- 5  Cumulative GHG and Oil Reductions for Meeting the MY2022-2025 Standards
Lifetime Reductions
CO2e reduction
(million metric tons, MMT)
Oil reduction (billion barrels)
( MYs 2021-2025 vehicles)
(MYs 2016-2028 vehicles)
   For the EPA GHG analysis, total industry-wide costs of meeting the MY2022-2025 GHG
standards are estimated at $34 to $38 billion.  Societal monetized benefits of the MY2022-2025
standards (exclusive of fuel savings to consumers) range from $40 to $41 billion.  Consumer pre-
tax fuel  savings are estimated to be $89 billion over the lifetime of vehicles meeting the
MY2022-2025 standards. Net benefits (inclusive of fuel savings) are estimated at $90 to $94
billion.  These values are all at a 3 percent discount rate; values at a 7 percent discount rate are
shown in Table ES-6 below.
5 The agencies' methods for assessing vehicle mileage accumulation are discussed in Chapter 10.3 for EPA, and
  Chapter 13 for NHTSA.

                                                                        Executive Summary
       Table ES- 6  GHG Analysis of Lifetime Costs & Benefits to Meet the MY2022-2025 Standards (for
                            Vehicles Produced in MY2021-2025)* (Billions of 2013$)

Vehicle Program
Net Benefits
3 Percent Discount Rate
Primary Analysis
RPE Sensitivity
7 Percent Discount Rate
RPE Sensitivity
These values reflect AEO 2015 reference fuel price case. The Primary Analysis reflects ICMs and the Sensitivity
Case reflects RPEs.  All values are discounted back to 2015; see Chapter 12.3 for details on discounting social cost
of GHG and non-GHG benefits. Note that Chapter 12 also includes a number of additional sensitivity cases.

   NHTSA's primary analysis shows that compared to the No Action alternative, the augural
CAFE standards could entail additional costs totaling $87 billion during MYs 2016-2028
(reasons for this span of MYs are discussed above), and a sensitivity case using ICM shows total
costs  of $79 billion. The primary analysis shows benefits totaling $175 billion, and the ICM
sensitivity case shows $178 billion.  Consumer fuel savings are estimated to be $67 billion to
$122  billion over the lifetime  of vehicles meeting the MY2022-2025 standards.  Thus, net
benefits (inclusive of fuel savings) could total $88 billion based on the primary analysis and $99
billion for the ICM sensitivity case.  These are estimates of the present value (in 2015) of costs
and benefits, based on a 3 percent discount rate. NHTSA has also conducted analysis using a 7
percent discount rate, and a broader sensitivity analysis to examine the impact of other key
analysis inputs, as discussed in Chapter 13. Below, Table ES-7 provides an overall summary of
costs  and benefits observed in NHTSA's analysis.
      Table ES- 7 CAFE Analysis of Lifetime Costs & Benefits to Meet the MY2022-2025 Standards (for
                             Vehicles Produced in MY2016-2028) (Billions of 2013$)

Vehicle Program1*
Benefits (Fuel)
Benefits (Other)
Net Benefits
3 Percent Discount Rate
Primary Analysis2
ICM Sensitivity Case3
7 Percent Discount Rate
Primary Ana lysis
1 Includes changes in maintenance costs (small relative to cost of additional technology).
2 The Primary Analysis reflects RPE.
3 Note that Chapter 13 includes a wide range of additional sensitivity cases.

As noted above, because EPA and NHTSA developed independent assessments of technology
cost, effectiveness, and reference case projections, the compliance pathways and associated costs
that result are also different.  Consideration of these two results provides greater confidence that
compliance can be achieved through a number of different technology pathways.

                                                                              Executive Summary
1 See 40 CFR 86.1818-12(h).
11 See 40 CFR 86.1818-12(h).
111 See 40 CFR section 86.181-12(h).
1V See 77 FR 62784 (Oct. 12, 2012).
v See 40 CFR 86.1818-12(h)(2)(i).
V1 National Academy of Sciences, National Research Council to the National Academies, "Cost, Effectiveness and
Deployment of Fuel Economy Technologies for Light-Duty Vehicles," June 2015.
vl1 Regulatory Impact Analysis:  Final Rulemaking for 2017-2025 Light-Duty Vehicle Greenhouse Gas Emissions
Standards and Corporate Average Fuel Economy  Standards, EPA-420-R-12-016, Table 5.1-8, page 5-8.